Written Commentary
MORNING COMMENTS
Geopolitics:
The North American Free Trade Agreement (NAFTA) began in January 1994. All agriculture products were tariff-free during NAFTA and continued to be tariff-free in the new United States-Mexico-Canada-Agreement (USMCA) when it went into effect in July of 2020. President Elect Trump vowed yesterday to put a 25% tariff on all goods from both Mexico and Canada. Additionally, a 10% tariff on all Chinese goods. This could be a strategy Trump is using to force some companies to bock on building up their businesses outside of the US before he even begins his term. The market is knee-jerking on the statement, but it will take some time to work around the USMCA in order to add tariffs if he is intending to execute.
Ag Fundamentals:
The winter wheat crop conditions released yesterday saw a 17% improvement from October. That is the best recovery jump in that time frame and wheat values are green anyway this morning. Speculators pointing toward Trumps tariff remarks yesterday, but the big picture of ‘large supply, low demand’ is the main driver. Soy oil jumped this morning, due to the tariff talk against China possibly helping domestic demand. No weather concerns forecasted to start the month of December. Crude oil is slightly higher today, but is still below $70/barrel. The ceasefire talks in Israel exposed the lack of demand from China and others to support crude values. No flash sales this morning, but Algeria is looking for some corn in an international tender for 240K MT.
A Weak La Nina Watch is in effect for this winter.
Export & World News
Algeria is looking to buy up to 240K MT of animal feed corn and 70K MT of soymeal. South Korea is looking to buy up to 138K MT of animal feed corn, they did buy 65K MT of feed corn yesterday.
Malaysian palm oil futures were up 36 ringgit overnight, at 4735.
Daily Trading Limits: Corn $0.30 (expanded $0.45); Soybeans $0.85 (expanded $1.30); Minneapolis Wheat $0.60 (expanded $0.90); KC Wheat $0.40 (expanded $0.60); Chicago Wheat $0.40 (expanded $0.60)
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